Coronavirus latest: European markets cut losses in tumultuous trading


US stock futures turn positive

US stock futures have turned positive on another day of volatile trading that has seen sentiment shift rapidly through the trading session. European markets have also recovered some of their earlier steep losses to trade around 1 per cent lower. 

The skittish pre-market pattern in US stock futures is “typical of a market tug of war” between still-worrying fundamentals and the technical reflex to buy the dip after a sharp sell-off, said Mohamed El-Erian, chief economic adviser to Allianz.

“Unfortunately, this morning’s updates on the coronavirus still go against the comforting notion of a transitory shock,” he added in a tweet. 

Call for greater European cooperation

Miles Johnson in Rome reports:

Stella Kyriakides, European Commissioner for Health, said that greater collaboration between European countries was needed to tackle the continent’s coronavirus outbreak as the infection count in Italy rose to 374 and a twelfth person in the country died from the virus.

“Diverging approaches across the EU should be avoided, and this is why the Commission stands ready to coordinate among member states should this be necessary,” she said at a press conference in Rome alongside Italy’s health minister and the European head of the WHO.

“We are facing a situation where there are still many unknowns about this virus, and in particular its origin and how it is spreads,” she said, adding that the Commission was involved in on the ground support to gather more information about the spread of the virus.

We must be alert to misinformation and disinformation as well as xenophobic statements that are misleading citizens and putting into doubt the work of public authorities.

Hans Kluge, European regional director of the WHO, said it was important that people did not panic, and that the WHO was “making every effort possible” to coordinate a global response to the outbreak.

“There is no need for a panic and there must be trust for what the health authorities in Italy are doing,” he said.

My message to the Italian people is to take the measures to protect yourself by adhering to the guides from you local health authorities, and to stay safe while traveling.

US oil marker WTI slumps below $50 a barrel

A key measure of the price of oil has dropped to its lowest level since January 2019 as the coronavirus shutdown slows global economic growth and sends crude prices tumbling.

West Texas Intermediate, the US oil benchmark, dropped more than 1 per cent to as low as $49 a barrel this morning, its weakest in 13 months and 25 per cent off the highs it reached last month.

The coronavirus outbreak is on the verge of reaching pandemic status, having spread to 40 countries, with more than 81,000 cases confirmed and over 2,700 deaths.

China, the world’s biggest crude importer, has implemented large scale lockdowns, with millions of people quarantined and industrial activity has taken a significant hit.

Fatih Birol, executive director of the International Energy Agency, warned yesterday that global oil demand growth had dropped to its lowest level in a decade and said the virus could yet lead to further decline.

Analysts at ING said:

Concerns over the rising number of Covid-19 cases outside China continue to weigh on sentiment, and market participants are likely to remain cautious until there is a sign of a peak in of cases outside China.

Brent crude – the international oil benchmark – was down 1.5 per cent at $54.10 a barrel in late morning trade in London and is also down 25 per cent since early January. It fell as low as $53.11 earlier this month.

EU warns of rising economic risk from virus

Mehreen Khan reports from Brussels:

The EU’s economics commissioner Paolo Gentiloni has warned the coronavirus outbreak represents a growing “downside” risk to Europe’s economy.

Speaking to journalists this morning, the Italian commissioner said it remained “too soon to qualify the impact” of the outbreak for the global and European economy.

Brussels’ health commissioner is in Rome today and will hold a press conference with Italian authorities.

“It is a rapidly evolving situation which we will continue to monitor closely,” added Mr Gentiloni.

Mr Gentiloni also responded to calls from Italy’s deputy economic minister for more flexibility from the EU in abiding by Brussels budget rules.

The former Italian prime minister said there were already clauses in the Stability and Growth Pact rules to allow for flexibility in “extraordinary circumstances” and these have been used in the past by Italian governments to cope with earthquakes.

“That will be discussed over the next months … bearing in mind the conditions of how these clauses are used,” said Mr Gentiloni.

Vienna school evacuated on virus fears

Sam Jones reports from Zurich:

A secondary school in central Vienna has been evacuated after a teacher fell ill with a suspected case of the novel coronavirus.

The teacher had recently travelled to northern Italy, Austria’s Krone newspaper reported on Wednesday. Medical authorities have yet to ascertain whether the teacher has the infection.

Vienna police confirmed the precautionary shutdown of the school. Pupils have been sent home and parents told to isolate them until further notice. The Bundesgymnasium Albertgasse is located in Vienna’s downtown Josefstadt district, which abuts the Ringstrasse in the centre of the city.

Austrian authorities are also expected to reveal later today whether the death yesterday of a 56-year-old Italian woman in the province of Carinthia was the result of the virus, known as Covid-19. The woman — who was visiting Austria on holiday from north east Italy — had displayed coronavirus-like symptoms.

Austrian authorities have been taking a hard approach to containing the disease. Interior minister Karl Nehammer said forced quarantines and lockdowns would be selectively used should further cases emerge. Guests at a luxury hotel in Innsbruck are already in quarantine after the hotel’s receptionist was confirmed as one of the country’s first two cases of the viral infection yesterday.

Sell-off challenges market narrative

European and US stocks are teetering on the verge of correction territory — typically defined as a 10 per cent slide from peak levels — as another day of heavy selling shakes global markets.

The outbreak of the virus is a challenge to investors’ prevailing narrative that there has been no alternative other than to keep ploughing money into equities this year, strategists at Barclays said.

“Equities are coming back to earth fast,” the bank’s equities strategists said in a note to clients on Wednesday. “Inflows and rising hedge fund exposure have led stocks higher, even as other asset classes have shown rising risk aversion.”

Equities had been bid up to all-time highs in the US and Europe, but the latest sell-off realigns stocks with macro-economic fundamentals such as manufacturing surveys, the strategists added.

FTSE 100 erases gains for the 21st century

London’s blue-chip stock index has now erased all of its gains for this millennium thanks to the coronavirus fuelled sell-off.

The FTSE 100 was recently 1.1 per cent lower, sending it below its level on December 31, 1999. It is not all bad news though, the stock market has still more than doubled since the lows it hit during the dot-com bubble crash and financial crisis.

Four children diagnosed with virus in Italy

Miles Johnson reports from Rome:

Four children have tested positive for the coronavirus in the northern Italian region of Lombardy.

The region’s health minister Giulio Gallera said a 4-year-old girl was hospitalised, while two 10-year-old boys and a 15-year-old boy had been diagnosed with the virus.

Mr Gallera said the virus was more dangerous for the elderly, which so far make up all of Italy’s 11 dead, than children.

The virus “has a much more serious effect on elderly people who have previous pathologies,” he told Italian television.

Iranian deaths rise to 19

Najmeh Bozorgmehr reports from Tehran:

Iran’s health ministry said on Wednesday that the number of fatalities in the country had risen to 19 — from 15 one day before — out of 139 people infected with the disease. The latter stood at 95 on Tuesday.

Meanwhile, six more provinces have reported infections which means 19 out of 31 provinces are now affected by Covid-19.

Kuwait cases jump to 18

Ahmed Al Omran reports from Riyadh:

Kuwait said the number of coronavirus cases in the Gulf state has risen to 18 after confirming six new cases this morning.

The Ministry of Health said in a statement to the official news agency that all the new confirmed infections are connected to people who travelled to Iran.

It added:

All reported Covid-19 cases are in good health and receiving medical treatment at a hospital equipped to deal with coronavirus cases.

France reports second coronavirus death

A second person infected by the novel coronavirus has died in France, according to a Reuters report.

The country’s health authorities said a 60-year old French man in a serious condition had been tested late on Tuesday and died overnight.

The man was one of three new cases confirmed in France, bringing the total number of infections reported there to 17.

Investor complacency dislodged

George Efstathopoulos, multi asset portfolio manager at fund manager Fidelity International, believes the complacency hanging over markets has been finally shattered by the spread of the virus outbreak.

In our view, the volatility isn’t as surprising as the fact that it took so long to rear its head. However, the recent swings indicate the complacency that appears to have settled over markets during the earlier stages of the outbreak has been dislodged.

US futures turn lower as rout intensifies

European stocks and US futures have tumbled, as the rout that has gripped global markets intensified with few signs that the outbreak of coronavirus is coming under control.

Stock markets across Europe fell nearly 3 per cent, sending the regional benchmark Stoxx 600 index to its lowest level since December. The index has now lost more than 9 per cent of its value over the past week as investors dump stocks and move into traditional haven assets.

US futures pointed to falls of more than 1 per cent at the open in New York, following a sharp sell-off in the first two days of trading this week. The S&P 500 dropped 3 per cent on Tuesday, bringing its losses to 7.6 per cent since hitting a record high last Wednesday and erasing a total of $2.1tn in market value.

Case numbers surge outside China

The number of reported infections outside China has risen sharply in recent days, with South Korea particularly badly hit. The latest non-China infection and death figures are as follows.

South Korea: 1,261 cases, 12 deaths
Italy: 322 cases, 10 deaths
Japan: 70 cases, 10 deaths
Iran: 95 cases, 16 deaths

Steve Bernard, interactive design editor, has mapped the increase:

Wuhan doctors call for urgent reinforcements from abroad

Primrose Riordan reports from Hong Kong:

Doctors in Wuhan urgently need international help, two Chinese medical staff named Yingchun Zeng and Yan Zhen said in an emotional letter published by medical journal The Lancet this week.

The two staff said nurses have “pressure ulcers on their ears and forehead” from wearing facial masks and shields, were fainting from physical and mental exhaustion and their mouths are “covered in blisters” due to the long hours in the wards.

The two staffers, who said there were major equipment shortages, wrote:

We feel helplessness, anxiety, and fear . . . we need much more help. We are asking nurses and medical staff from countries around the world to come to China now, to help us in this battle.

Stocks in fresh slide as virus fears grow

South Korea starts mass testing religious sect as cases soar

Edward White and Kang Buseong report from Seoul:

South Korean officials said Wednesday they had started mass testing of more than 200,000 members of a quasi-religious sect believed to be at the heart of an outbreak of coronavirus hitting Asia’s fourth-largest economy.

The country, the worst hit by the virus outside of China, is on edge with 12 deaths and 1,261 people with confirmed infections after hundreds of new cases were reported by the Korea Center for Disease Control and Prevention on Wednesday.

Most of the new cases continue to be located in Daegu, the country’s fourth-biggest city, which has been at the centre of the outbreak in the country. In Daegu, most infections have been linked to a pseudo-Christian sect, known as the Shincheonji Church of Jesus, and a hospital at the neighbouring town of Cheongdo.

The number of confirmed cases is expected to rise in the coming days; tests of almost 32,000 people have been carried out and a further 20,716 are under way.

Seoul has promised to test all of the 215,000 members of the Shincheonji sect after receiving a list of the group’s members and amid rising public anger over the group’s role in spreading the disease. However, there is also mounting criticism of Moon Jae-in, the president, because his government has not restricted travel to the country from China despite other countries blocking Chinese travellers in recent weeks.

Earlier on Wednesday, US Forces Korea confirmed that a US soldier had tested positive for coronavirus in South Korea, in the first confirmed case for the US military. The US has 28,500 troops stationed in South Korea to support the country against a potential attack from North Korea and the announcement came a day after the US and South Korea said they were considering scaling back joint military exercises on the Korean peninsula owing to concerns about the spread of the coronavirus.

Markets Insight: Investors remain complacent despite sell-off

Nouriel Roubini writes for FT Opinion:

Investors are deluding themselves about how severe the coronavirus outbreak will be. Despite this week’s big sell-off in equity markets, the worst is yet to come.

Until this week, the market reaction to the virus has been mild — after a dip in late January, US and global equities rallied to new highs. This complacency was based on a number of flawed assumptions.

First, that the epidemic would be contained mostly to China, rather than becoming a global pandemic. Second, that it would be contained and peak before the end of the first quarter, thus limiting the economic damage to China and the global economy. Third, that the growth path would be V-shaped, with a strong rebound in the second quarter and beyond. Fourth, that policymakers — both monetary and fiscal — would take strong early actions to support economies and markets, if things were to weaken significantly.

It is becoming clear that this is a global pandemic rather than a China-focused epidemic. And we do not know yet how many other countries in Asia and other parts of the world will experience a severe outbreak of the virus — most likely many more.

Read the full piece here.

Nouriel Roubini is professor of economics at the Stern School of Business, NYU and Co-Founder of Rosa & Roubini Associates

EmoticonGlobal sell-off intensifies

European stocks are sliding in the first hour of trading, with the Stoxx 600 index recently off 1.5 per cent. The regional benchmark has now lost more than 8 per cent of its value since the record highs it touched one week ago.

US stock futures had been pointing to a stable open on Wall Street later in the trading day, but have now also turned lower.

Esty Dwek, head of global market strategy at Natixis Investment Managers, said the recent spread of cases in Japan, South Korea and Italy has raised concerns “the impact to growth could be broader and last longer than initially anticipated.”

South America’s first possible case as man tests positive in Brazil

Persis Love reports:

The first possible case of coronavirus has been reported in South America, pending the results of a retest before being confirmed, Brazil’s health ministry has announced.

After returning from northern Italy last week, the patient admitted himself to hospital in Sao Paulo yesterday showing symptoms of a fever, cough, sore throat and cold. The hospital carried out tests for Covid-19 and sent the samples to a national lab for a second set of results before the case is declared official.

The patient, a Sao Paulo resident aged 61, had been on a work trip in Lombardy, where the coronavirus cases in northern Italy are concentrated.

Medical workers say Bali unprepared for Covid-19 outbreak

George Hammond writes:

Bali is severely underprepared to cope with an outbreak of coronavirus, medical workers on the Indonesian island have warned.

Should the virus spread to Bali, local hospitals are ill-equipped to deal with it, according to doctors interviewed by the FT. “There’s a lack of facilities and I pray we won’t be infected,” said Ni Ketut Pande Sri Widnyani, senior doctor at Sanjiwani Gianyar hospital. “Right now we’re not up to the required standard,” she said of the hospital.

Bali has a population of 4m and is a hugely popular holiday destination, with tourism accounting for 80 per cent of the local economy.

To date, no cases have been confirmed in Indonesia, but the credibility of that reporting has been questioned by some international experts, given the country’s roughly 270m population and close ties to China.

Mainland Chinese made up around a fifth of the more than 6m international visitors to Bali last year, many of them from Wuhan, the city at the centre of the coronavirus outbreak. A large number of Indonesians also work in China.

“As a major destination for visitors from China we would expect to see infected patients,” said Ian Mackay, a virologist at Queensland University in Australia.

Read Stefania Palma and Febriana Firdaus’ report on the island here.

Lufthansa looks to cut costs as cancellations bite

German airline Lufthansa has grounded 13 aircraft following the cancellations of parts of its schedule in response to the virus.

The carrier, whose shares have fallen 15 per cent over the past week, has cancelled all flights to and from the Chinese mainland, and also trimmed its service to Hong Kong following lower passenger demand.

The group – which also operates Swiss and Austrian Airlines as well as its flagship brand – has moved to lower staffing costs following the disruption. The airline has announced it is offering all employees unpaid leave and exploring the expansion of part-time work options.

It is too early to estimate the expected impact on earnings, Lufthansa added.

Number of cases passes 81,000

The number of people infected by the novel coronavirus continued to rise overnight, pushing past 81,000. More than 2,700 people have now died, though the number of people reported to have recovered has also increased.

Steve Bernard, Interactive Design Editor, has mapped the figures:

Six new cases announced in Spain

Daniel Dombey reports from Madrid:

The spread of Coronavirus has increased in Spain, with six cases announced on Tuesday, almost all of them of people who had recently been in Italy.

The cases included a 24-year-old man in Madrid, a woman in Barcelona, a third case in the Valencia region, and the wife and two friends of an Italian doctor on holiday in Tenerife whose infection had been announced the previous day.

Before this week, there had been just two cases of coronavirus in Spain, neither of them on the mainland.

Austria hotel put into lockdown after receptionist tests positive

Sam Jones in Zurich

Police have imposed an indefinite lockdown on a 5-star hotel in Innsbruck, Austria, after it emerged that one of the country’s two confirmed coronavirus cases had worked there as a receptionist.

Guests at the Grand Hotel Europa have been told they cannot leave or re-enter the hotel, a 108-room venue in the centre of the city, capital of the Tyrol region and one of Austria’s most popular winter sports hubs.

“No one can get in and out of the hotel to make sure that if other infected people are staying in the hotel, the virus won’t be spread,” Austrian Interior Minister Karl Nehammer told a press conference on Tuesday evening.

“All these measures have one purpose – to stop the virus and its spread. There is no reason to panic,” he said.

Mr Nehammer added he could not rule out authorities imposing further quarantines in other areas where cases are found.

Both of the individuals infected by Covid-19 in Austria are 24-year-old Italians, in a relationship, and are currently in an isolation ward in an Innsbruck hospital.

It is thought one of them had recently travelled to northern Italy, where they came into contact with the disease.

EmoticonEuropean stocks fall following Wall Street sell-off

European stocks have fallen for a third straight day, rejoining a global sell-off sparked by escalating concerns over the impact of the coronavirus.

The regional Stoxx Europe 600 index fell 0.8 per cent, taking its losses this week to more than 6 per cent. There were similar losses across the major financial capitals in continental Europe, while London’s FTSE 100 traded at its lowest levels in over a year as it fell 0.4 per cent.

US futures pointed to moderate gains at the open, suggesting investor sentiment is at least stabilising following a run of heavy selling and rush into haven assets. The yield on the benchmark US 10-year Treasury note rose two basis points off its all-time record lows to 1.35 per cent.

Danone trims 2020 sales growth goal because of outbreak

Leila Abboud reports from Paris:

Danone has scaled back its sales growth and profit margin targets for 2020 as the coronavirus dents demand in China, its second-largest market, and it embarks on a €2bn spending plan to reduce its reliance on non-recycled plastic packaging and cut carbon emissions.

The maker of Evian bottled water and Alpro plant-based yoghurts said on Wednesday that it would aim for 2-4 per cent comparable sales growth this year, instead of the earlier target of 4-5 per cent.

The health crisis in China will shave off about €100m in sales in the first quarter mostly from the bottled waters business, and delay some new product launches in baby formula.

Meanwhile, Danone’s operating margin is expected to reach more than 15 per cent this year, below the 16 per cent or above it had earlier promised.

Diageo to take profit hit of up to £200m from virus

Diageo, the world’s biggest spirits maker, has warned the coronavirus outbreak will knock its profits this year by up to £200m – around 5 per cent of last year’s total – as much of its Asian market goes into lockdown.

The drinks group behind Johnnie Walker whisky, Smirnoff vodka and Tanqueray gin said that trade had dried up in China, the heart of the outbreak, where bars and restaurants have been closed and there has been a “substantial reduction” in banqueting.

In other Asian markets – notably South Korea, Japan and Thailand – trade has also been hit as events have been postponed, conferences and banquets have been reduced and tourism has dropped off.

As a result, the group expects a negative impact on net sales of £225m to £325m, and a £140m to £200m hit to operating profit.

Europe: what you missed

An American soldier in South Korea has been infected with coronavirus, in the first confirmed case within the US military. The news came a day after the US and South Korea said they were considering scaling back joint military exercises on the Korean peninsula owing to concerns about the spread of the virus, which has so far reported 12 deaths and 1,146 cases in the Asian country.

Asia-Pacific stocks are lower for the third day in a row, following a sharp sell-off in the US yesterday. Most benchmarks in the region have now erased any gains for the year.

Hong Kong is launching a HK$10,000 handout for residents over the age of 18, in a move designed to stimulate an economy weakened by protests and the coronavirus. The measures are expected to cost HK$71bn and benefit around 7m people.

Japan, which is still expecting to host the 2020 Olympics in Tokyo this summer, has asked that professional sports matches and music concerts be cancelled or delayed over the next two weeks. The move is designed to control the spread of the virus.

Health authorities in China reported 52 new deaths from coronavirus up to the end of Tuesday, with all fatalities in Hubei province, the centre of the outbreak. That took the total number of deaths to 2,715. There have been a total of 78,064 cases in the country.

Kuwait suspends flights to Singapore and Japan

Simeon Kerr reports from Dubai

Kuwait has suspended flights to Singapore and Japan in the latest measure to stem the spread of coronavirus as the number of infections from those returning from neighbouring Iran rises to 11.

The Gulf state said late on Tuesday that any Kuwaitis returning from these two countries, which have reported new virus cases, would be quarantined and non-Kuwaitis would not be allowed to enter.

The measures mirror similar decisions made by Kuwait regarding travel to and immigration from other epicentres of the virus, including South Korea, Thailand and Italy. Kuwait’s land border with Iraq has also been closed to limit the spread of the virus.

Gulf states are scrambling to limit their exposure after reporting a surge of infections from Iran, where the number of deaths has risen to 16, the largest number outside of China.

Bahrain has registered 26 cases, all of whom arrived from Iran via Dubai and Sharjah in the United Arab Emirates. The tiny kingdom on Wednesday closed universities and training centres for two weeks as a precautionary measure.

The number of cases in Oman has risen to four.

The UAE, which on Tuesday barred flights to Iran for at least a week, has reported 13 cases, three of whom have recovered. The UAE’s cases include Chinese tourists and visitors from Iran.

The state-owned carrier of Qatar, which has not reported any cases, will for two weeks from Wednesday reduce the frequency of its service to Iran’s capital and suspend flights to Mashhad, Shiraz and Isfahan. Qatar Airways also said it would operate flights to South Korea with a smaller aircraft.

Coronavirus “brings renewed uncertainty” – Hong Kong stock exchange

Primrose Riordan reports from Hong Kong

Hong Kong Exchanges and Clearing acknowledged the coronavirus “brings renewed uncertainty” to the region as it reported what it said was its highest ever revenue in 2019.

The increase in revenue came despite major protests last year in the city which tipped the territory into recession.

The exchange said its revenue was 3 per cent higher on the previous year to HK$16.3bn (US$2bn) in 2019, in line with estimates, while it had a 1 per cent increase in profit attributable to shareholders, to HK$9.39bn, slightly below analyst forecasts.

“Very strong Stock Connect revenue, a buoyant IPO market and good returns from investments offset macro-driven softness in trading volumes in the Cash and Derivatives Markets,” HKEX chief executive, Charles Li, said.

The exchange said there had been an 18 per cent drop in the average daily trades of equity products last year compared to 2018.

HKEX says they had 183 companies list in 2019, which raised $314.2 billion – a 9 per cent increase on the year before.

Japan set to delay sports matches and concerts

Robin Harding reports from Tokyo

Japan is requesting the cancellation or delay of professional sports matches and concerts for the next two weeks in an effort to control the spread of coronavirus.

Speaking at a meeting of the government’s anti-virus task force, prime minister Shinzo Abe said: “The next one or two weeks are crucial to preventing the spread of the virus, so considering the infection risk of sporting and cultural events that bring large crowds together, we request that they be cancelled, postponed or greatly reduced in size for the next two weeks.”

The government request comes a day after it launched a new anti-virus strategy, focused on slowing and containing the spread of the disease, rather than preventing it altogether. Japan now has 157 cases, excluding evacuees from China.

So far, Japan has insisted that this summer’s Tokyo 2020 Olympics will go ahead as planned, but the request to postpone sporting events sets a precedent that could be invoked if the virus is still circulating in the summer.

Coronavirus fears knock Asia stock markets

Hudson Lockett reports from Hong Kong

Asia-Pacific stocks sold off for a third day on Wednesday as concerns mounted that the spread of coronavirus could escalate into a pandemic, pushing most benchmarks in the region into the red for 2020.

The falls for Asian equities followed a second day of sharp falls for global stocks, with the S&P 500 shedding 3 per cent as the US Centers for Disease Control and Prevention warned it was likely the virus would cause a pandemic that could cause “severe” disruptions to daily life.

Tokyo’s Topix fell 0.8 per cent, taking it almost 7 per cent lower in 2020, while in Seoul a fall of 1.1 per cent for the Kospi index left it down more than 5 per cent for the year to date. On Wednesday China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks dropped as much as 1.5 per cent, briefly erasing its gains for the year before walking back losses to be flat at the end of the morning session.

In Hong Kong, the Hang Seng index dropped 0.5 per cent as the government announced a slew of stimulus measures and warned that the virus could further weigh on the city’s already battered economy.

Sydney’s S&P/ASX 200 index tumbled 2 per cent, leaving it up just 0.6 per cent for the year and one of the only major stock benchmarks in the region not in the red this year.

Coronavirus sparks new Singapore-Hong Kong rivalry

The rivalry between Asia’s two main international financial hubs usually centres on business and finance. But since the coronavirus outbreak, Hong Kong and Singapore’s competition has acquired a new dimension — their ability to deal with epidemics.

Read our full coverage here.

EmoticonHong Kong announces $1,200 handout for residents

Hong Kong’s finance secretary announced a HK$10,000 ($1,283) handout for residents to boost local consumption following months of protests and the hit to the economy from coronavirus.

In his budget on Wednesday, Paul Chan said the government would give permanent residents above the age of 18 the funds to relieve financial burdens. He added that the measure would cost HK$71bn and benefit around 7m people.

“The social incidents in the past months and the novel coronavirus epidemic have dealt a heavy blow to Hong Kong’s economy,” Mr Chan said, referring to anti-government protests that took off in June.

Mr Chan expects the city’s economy to contract by 1.5 per cent to 0.5 per cent in 2020.

Coronavirus spread threatens global recession – Moody’s Analytics

Coronavirus threatens to spark US and global recessions in the first half of 2020 if it becomes a pandemic, according to Mark Zandi, chief economist at Moody’s Analytics.

Mr Zandi estimates the chance of a pandemic has now risen to about 40 per cent from 20 per cent previously as “the chance that the virus will be contained to China appears increasingly tenuous.”

The number of cases of the virus reported in China have been falling, but outbreaks in South Korea and Italy have highlighted the potential for Covid-19 to spread quickly among populations outside China.

“The coronavirus has been a body blow to the Chinese economy, which now threatens to take out the entire global economy. A global recession is likely if COVID-19 becomes a pandemic, and the odds of that are uncomfortably high,” Mr Zandi said.

Anne Schuchat, principal deputy director of the Centers for Disease Control and Prevention, warned the public to prepare for a coronavirus outbreak in the US. “The current global circumstances suggest it is likely this virus will cause a pandemic,” she said.

Moody’s Analytics forecasts that if the outbreak remains contained to China and is under control by the spring then the country’s economy will contract in the first quarter, while full-year growth will be cut by a full percentage point to 5.4 per cent.

Under that scenario, the US economy will see 1.3 per cent growth in the first quarter, down 0.6 percentage points because of the virus.


US soldier tests positive for virus as South Korean cases soar

By Edward White, Song Jung-a and Kang Buseong in Seoul

A US soldier has tested positive for coronavirus in South Korea, in the first confirmed case for the US military.

A 23-year-old man is in self-quarantine at a residence off-base having visited two army camps in South Korea in recent days.

“KCDC and USFK health professionals are actively conducting contact tracing to determine whether any others may have been exposed,” the US Forces Korea said in a statement.

The announcement came a day after the US and South Korea said they were considering scaling back joint military exercises on the Korean peninsula owing to concerns about the spread of the coronavirus. The US has 28,500 troops stationed in South Korea to support the country against a potential attack from North Korea.

The number of confirmed coronavirus in South Korea continued to soar as testing efforts were ramped up. The country, one of the worst hit by the virus outside of China, has reported 12 deaths and 1,146 people with confirmed infections after reporting 169 new cases on Wednesday morning, according to the Korea Center for Disease Control and Prevention.

Almost all the new cases reported on Wednesday came in Daegu, the country’s fourth-biggest city, which has been at the centre of the outbreak in the country. In Daegu, most cases have been linked to a pseudo-Christian sect, known as the Shincheonji Church of Jesus, and a hospital at the neighbouring town of Cheongdo. But there is also some criticism that the government has not acted swiftly enough to follow other countries in blocking travellers from China.

The number of confirmed cases is expected to rise in the coming days. Tests of almost 30,000 people have been carried out and a further 16,700 are underway. The government has promised to test all of the 215,000 members of the Shincheonji sect.

“It still looks like the tip of the iceberg … More draconian measures are needed to stop the spread of the virus,” said Kim Woo-joo, a professor of infectious medicine at Korea University Guro Hospital.

China reports 52 deaths from coronavirus

Health authorities in China reported 52 new deaths from coronavirus up to the end of Tuesday, with all fatalities in Hubei province, the centre of the outbreak. That took the total number of deaths to 2,715. The country had reported 71 deaths for the previous day.

There were 406 new cases of the virus in the mainland on Tuesday, taking the total number to 78,064. There were 508 reported cases on Monday.

Virgin Australia forecasts $50m hit from low demand

Jamie Smyth reports from Sydney

Virgin Australia Group has warned the coronavirus outbreak could cost it A$50-75m ($33m-$49.5m) in the six months to end June due to weaker demand, prompting the struggling carrier to slash flight capacity and restructure its fleet.

Australia’s second biggest airline said on Wednesday it would retire 12 aircraft by October 2020 to cut costs, a move which would reduce overall flight capacity by 3 per cent in 2020 and 5 per cent in 2021.

“The coronavirus outbreak is having a significant effect on the travel industry and we are also seeing weaker domestic and international demand,” said Paul Scurrah, Virgin Australia chief executive. “We are responding to this with immediate steps to minimise impact to the Group’s financial position.”

Virgin unveiled the shake-up as it reported an A$88.6m loss after tax for the six months to end 2019, compared to a profit of A$73.8m in the same period last year.

Asia stocks fall after Wall Street sell-off

Stocks in Asia-Pacific dropped on Wednesday morning, following on from a sharp sell-off on Wall Street on a warning over the spread of the coronavirus in the US and new cases in Europe.

South Korea’s Kospi fell 1.6 per cent as the number of cases in the country neared 1,200, while the Topix in Japan was down 1.5 per cent and Australia’s S&P/ASX 200 was down 2 per cent.

Wall Street fell for the second consecutive day on Tuesday as US health officials warned Americans to prepare for the spread of coronavirus. The S&P 500 tumbled 3 per cent, taking its losses since a record high last Wednesday to 7.6 per cent. S&P 500 futures appeared more steady, rising 0.4 per cent.

Officials at the US Centers for Disease Control and Prevention warned of the need to prepare for person-to-person transmission in the US and said it was no longer a question of if the virus would spread in the country, but when and how many people would be affected.

Gold, which is seen as a haven in times of uncertainty was up 0.5 per cent at $1,643 an ounce. The yield on 10-year US Treasuries was a touch higher after a rush to the safety of government debt pushed it to a record intraday low on Tuesday.

“The potential economic impacts [from coronavirus] remain highly uncertain,” ANZ said in a note. “Reduced trade and people flows, workplace absenteeism, supply chain disruption, and the impact on consumer and business sentiment are all going to weigh on growth.”

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